Healthcare stocks, brokerage upgrades lift shares

By IBT Staff Reporter On 12/21/09 AT 12:00 PM

Stocks gained more than 1 percent on Monday, buoyed by healthcare shares, after a Senate bill advanced which had been stripped of provisions seen as detrimental to health insurance and other companies.

Stocks also got a lift after brokerages upgraded two Dow components.

Legislation to overhaul the U.S. healthcare system passed a crucial test early Monday as backers cleared a procedural hurdle to approving President Barack Obama's top legislative priority.

This is a relief rally, since some of the most onerous provisions in the bill, such as a possible tax on pharmacy benefit mangers, turned out not to have materialized, said Craig Peckham, equity trading strategist at Jefferies & Company in New York.

Also, while the bill passed the Senate, the market knows it'll be an uphill battle to reconcile the Senate and House versions.

Aluminum company Alcoa Inc gave the biggest boost to the Dow after Morgan Stanley raised the company to buy, expecting it to report increased profitability in its alumina and downstream divisions. The stock advanced 8.9 percent to $15.87.

The S&P consumer discretionary sector rose 1.2 percent following the last weekend before the Christmas holiday despite a major snow storm in the Eastern United States, which caused some shoppers stay in.

Several acquisition deals were announced on Monday, with Sanofi-Aventis agreeing to buy consumer healthcare company Chattem Inc for about $1.9 billion, lifting the stock 33 percent to $92.85.

In addition, Bucyrus agreed to buy Terex's mining business for $1.3 billion in cash.